ECGC buyer credit limits: applying, using and renewing them

This guide is for exporters holding, or about to take, an ECGC policy such as the Shipments Comprehensive Risks (SCR) policy. It explains why each buyer needs a credit limit, how to apply, what ECGC asks for, and what happens when your exposure runs past the limit.

Why a credit limit matters

Under the SCR policy wording, ECGC's liability for commercial-risk losses on any one buyer (insolvency, non-payment, non-acceptance of goods) is limited to that buyer's credit limit. The limit is the ceiling on what ECGC will pay for that buyer, however much you shipped and however much premium you paid. ECGC's SCR and SEP leaflets list obtaining valid credit limits on buyers, and on the banks opening your letters of credit, among the policyholder's obligations.

The application also gives you a second opinion. ECGC underwrites the buyer before approving a limit, and an approval for less than you asked for, or with tighter payment terms, tells you something about the buyer.

Discretionary limits: cover before you have an approval

The SCR wording gives a limited automatic cover where you have not applied, or have applied and are still waiting for ECGC's decision. It does not apply to buyers on ECGC's list of buyers who have come to its adverse notice, which you can see after logging in to ECGC's website.

Situation	Discretionary limit in the SCR wording
DP or cash against documents	Up to ₹40 lakh, with no more than two claims payable under this clause
DA or open delivery	Up to ₹20 lakh, only if you completed the previous policy period and paid at least ₹5 lakh premium on that period's shipments; no more than two claims
Repeat buyer on identical terms	If in the past two years you shipped to the buyer on the same payment terms and every payment came in on the due date: the highest amount outstanding on those shipments, up to ₹80 lakh, of which no more than ₹30 lakh on DA or open delivery terms

These figures are from the standard SCR wording. Other policies have their own rules, so check your own policy and schedule. Treat discretionary cover as a stopgap and apply for a proper limit on any buyer you plan to keep.

Applying on ECGC's online system

1. Log in to the ECGC portal (ECGC's SMILE system at www.ecgcltd.in) with your policyholder credentials. ECGC's online services include credit limit applications, shipment declarations and claims.
2. Choose the right application. ECGC's forms are numbered 144 (first credit limit on a buyer), 144A (enhancement of an existing limit), 144B (specific approval, for example for a shipment or for a country on the restricted cover list) and 144C (limit on an LC opening or confirming bank).
3. Enter the buyer's details and the limit you need. Ask for the highest amount you expect to be outstanding at any one time, not your annual sales to the buyer.
4. Pay the processing fee. The policy lets ECGC charge a credit limit application processing fee; the portal or your ECGC branch will show the current amount.
5. Apply before you ship. Ideally apply while the order is being negotiated, so that you can adjust terms if ECGC approves less.
6. Read the approval carefully. It states the amount, the payment terms and any conditions. ECGC can also specify a lower percentage of cover for a particular buyer; if it does, that percentage applies to losses on that buyer.

Information ECGC asks for

• The buyer's full legal name, address and contact details, registration or VAT number, and parent company if any.
• The buyer's bankers and account details.
• The payment terms (DP, DA, open account, LC) and credit period.
• Orders in hand and your shipment schedule with values, or your expected business if there are no orders yet.
• Your experience with the buyer over the last two years: shipments, payment dates, and any delays or overdues with reasons.
• Any connection between you and the buyer, such as common shareholding or directors.
• What you know of the buyer's financial standing, including financial statements or credit reports if you have them.

Give true, complete and accurate answers. ECGC underwrites on what you tell it, and the policy wording allows it to avoid cover where a statement you made is untrue.

Validity and review

The SCR wording does not put a fixed expiry date on an approved limit, but the limit is tied to the payment terms and conditions in the approval. ECGC may, by written notice, stop cover for future shipments to a named buyer or to all buyers in a country; shipments made before the date in the notice are not affected. Review your limits:

• before a larger order that would push the outstanding amount past the limit (apply for an enhancement first);
• before changing terms, for example from DP to DA or to a longer credit period;
• when a buyer starts paying late or changes ownership, name or address;
• at each policy renewal, to drop limits you no longer use and raise ones you outgrow.

When your exposure exceeds the limit

Anything outstanding above the limit is at your own risk. The SCR wording says that ECGC acknowledging your declaration, or accepting premium on a shipment that exceeds the limit, does not bind it to cover that shipment. In June 2026 the Karnataka High Court upheld this: an exporter who declared and paid premium on a ₹42.14 lakh shipment, against an approved limit of ₹10 lakh it had never asked to raise, could not recover more than the limit.

If an order would take you over the limit, either apply for an enhancement and wait for the decision, take an advance or a letter of credit for the excess, or split the shipment so that the outstanding amount stays within the limit. Track outstanding amounts against each limit in the buyer risk desk.

Common mistakes

• Asking for a limit equal to annual sales, or far below real peak exposure.
• Assuming a limit on one company covers its sister companies. Each legal entity needs its own limit.
• Shipping on DA under a limit approved for DP terms.
• Forgetting that LC opening banks also need limits.

Related on Exportsmitra

• Buyer risk desk: credit limits, overdue invoices and ECGC dates
• ECGC credit insurance: which policy suits your business
• When a buyer does not pay: ECGC declarations and claims step by step
• Verifying an overseas buyer and spotting fraud

Sources

• ECGC: Shipments Comprehensive Risks Policy wording (PDF)
• ECGC: Shipments Comprehensive Risks Policy (SCR)
• ECGC: Credit limit application forms
• ECGC: Credit limit application form, pre-shipment (PDF)
• TEXPROCIL circular on ECGC's SMILE online portal (PDF)
• Report of the Karnataka High Court judgment on credit limits, June 2026

Last checked 1 October 2026. Rules change: confirm with ECGC before you act.